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Research week 37

Macro-economic insights

With the departure of the United Kingdom, the competitive position of the continental European countries will shift. The northern countries are worse of in comparison with the south. The west, which is geographically closest, will be impacted the most. Regardless of the outcome the situation should be resolved as the status quo is having a negative effect as well. Johson is focused on his political future, profiling as a hard Brexiteer, he wishes neither to force the Brexit asap, get the best deal as possible or have early elections to take advantage of his current status amongst the people.

  • Nederland lijdt onder elke type brexit, maar impact van no-deal is het grootst – FD  (10/9/2019)
  • Gewonnen veldslag, lange oorlog – DT (8/9/2019)
  • Boris Johnson verliest zesde stemming oprij – DT (10/9/2019)

Mario Draghi had his last policy update as head of the ECB this week. The ECB has published his course during its September meeting. Apart from the expected interest rate decline of 10 BP on overnight deposits (now – 0,5%) and the criticised restart of the QE program as of 1/11 (20 BEUR monthly), it has announced the easing of the TLTRO’s. This will allow banks to lend money on a moderate term (3 years max) at negatives rates which should improve their profitability. Markets responded very moderate on the announcement, as most policy update was inline with expectations and already priced in on the market. The QE measure was widely criticised by both enemy and ally of the ECB’s low rate policy. The absence of an interest rate hike during the upswing of the last cycle has not normalised the monetary policy in the Euro area. The TLTRO could assist the banks in raising margins however the subscription for the next auction ended in August, when financing conditions were still more favourable on the market than that of the auction. More and more banks are considering charging the negative interest rates on the savings of its clients. In contrast Trump is mad with the Fed because the US government has to pay higher interest rates than Europe while he considers the US to be more solvent.

The ECB does not see a significant improvement of the current economic outlook for Europe. For this reason, more and more people believe we are set for a long period of low rates. Germany will likely enter a recession in Q3 2019 and apart from some northern countries the growth forecasts have deteriorated for most European nations. In contrast with the growth numbers, the unemployment is very low, which should impact wages and inflation. In Denmark they consider reviewing their migration policy due to the lack of labour force. In the Netherlands the wages have risen stronger than expected during the last quarter (3.3% vs 2.5%). Furthermore, the amount of people who have a high income (>100 k annually) has significantly risen since 2011. Along with Denmark and Norway, the Netherlands lead the way.

  • ECB pakt nog een keer uit, maar legt de bal nadrukkelijk neer bij overheden – FD (12/9/2019)
  • Kans op negatieve spaarrente significant lager na maatregelen ECB’ – FD (12/9/2019)
  • De stofzuiger keert terug op de obligatiemarkt – FD (13/9/2019)
  • Het laatste kunstje van Mario Draghi wordt geen gemakkelijke klus – FD (11/9/2019)
  • Als zelf zij her eer eens over zijn dat de ECB niets meer moet doen – FD (10/9/2019)
  • Griekse en Italiaanse rentes dalen na ECB-besluit – FD (12/9/2019)
  • ECB paraat om monetair wapenarsenaal in te zetten – DT (9/9/2019)
  • Hoe effectief zijn de ingrepen van de ECB? – FD (9/9/2019)
  • ECB zet de geldpers weer aan – FD (12/9/2019)
  • BlackRock-topman: ‘Rente blijft eindeloos op nul’ – FD (9/9/2019)
  • Duitse economie komt in derde kwartaal in recessie’ – FD (12/9/2019)
  • Negatieve spaarrente voor consumenten lijkt onvermijdelijk – FD (9/9/2019)
  • Hoogconjunctuur stuwt aantal topinkomens op – FD (12/9/2019)
  • Lonen gaan sneller stijgen dan CPB verwacht – FD (11/9/2019)
  • Trump eist negatieve rente van de Fed – FD (11/9/2019)

France and Google have settled their lawsuit concerning the tax evasion by google through Ireland. Google will pay 1 billion euro for 600 MEUR of tax evasion, the initial claim was 1.6 billion EUR.

  • Google schikt Frans belastingdispuut voor €1 mrd – FD (12/9/2019)

Ford was downgraded to a junk status last Monday. The detoriation of Ford’s credit rating is a reminder for the markets that eventhough lending conditions on bond markets are extremly favorable, individual companies can always get into rough waters. The strange thing is that there are close to no emessions on the Junk market and that these traders are waiting for downgrades.

  • Downgrade Ford herinnert beleggers in bedrijfsobligaties aan zwakke plekken – FD (10/9/2019)

Research Archive

29 September 2019 Research Week 39
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22 September 2019 Research Week 38
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15 September 2019 Research week 37
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8 September 2019 Research week 36
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1 September 2019 Research week 35
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25 August 2019 Research Week 34
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18 August 2019 Research Week 33
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11 August 2019 Research Week 32
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30 July 2019 Research Week 31
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30 July 2019 Research Week 29
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